Editor’s Note: Abound Solar will be manufacturing soon in Tipton, Indiana. Mark Chen, Director of Marketing at Abound Solar, told me in a phone conversation last month that 92% of Abound’s product is exported to Germany and Italy. Of the remaining 8% of their product destined for the US, 80-90 % of that goes to California, therefore, extension of the Italian feed-in tariff will have an impact on Indiana. Laura Ann Arnold

At the Solarexpo in Verona, Italy, this week, a big question on everyone’s mind will no doubt be the fate of the feed-in tariff. The Italian government has wrestled over how to shrink it in order to control the solar market growth and its impact on consumers who help to pay for it.

On Friday, the government is supposed to approve an extension of the current feed-in tariff policy – which was originally to end in June – until this August. So what does it mean for one of the hottest markets in the world? Despite anticipated cuts, the country remains sought-after by manufacturers and developers.

“Even the most pessimistic analyst will say this year Italy will still be 3-5 gigawatts,” said Mark Chen, director of marketing at Abound Solar. “Let’s say 3 gigawatts, and that’s still larger than the U.S. market.”

Abound Solar, a Colorado maker of cadmium-telluride solar panels, announced this week the signing of distribution agreements with Italian firms Thesan and DW Europe. Thesan and DW are both distributors and integrators, and Thesan in particular has designed its own mounting systems for solar panels, Chen said. Thesan is set to showcase a solar electric system design pairing Abound Solar’s panels with its own racking at the Solarexpo.

Thesan and DW Europe also have each bought solar panels in “single-digit megawatts” from Abound Solar since the start of this year, Chen said.

Italy also has been a key market for companies such as SunPower, who just announced a plan to sell a 60 percent stake to French oil and gas giant, Total, whose offer includes a $1 billion credit over five years to help fund SunPower’s power plant development business globally, among other things. SunPower bought an Italian project developer in 2010 and announced in January this year that it had built 85 megawatts of projects in that country.

Abound is among the thin-film startups who hope to expand their manufacturing operations quickly to compete in a market where crystalline silicon remains the overwhelmingly dominant technology. The need for huge capital to build factories has prompted companies large and small to turn to government or well-funded partners for help.

Chen said the Italian market – and Europe overall – remains attractive because its feed-in tariff policy puts a premium on ultra thin solar panels that can be integrated into the roof to appear less obtrusive. Thin films tend to be slimmer than silicon panels, which are roughly 6 times thicker, making thin film a more attractive option for building-integrated applications, Chen said.

“It has to do with the aesthetics and maintaining the traditional image of Italian villas and towns,” Chen said. “You have traditional tile rooftops. If you don’t have integration, then the first things you see are blue and black silicon cells not orange tiles.”

Some silicon solar panel makers, such as Suntech Power, however, have rolled out products for the building-integrated market.

Abound Solar has snagged a $400 million federal loan to help build 775 megawatts of factories in Colorado and Indiana. The company shipped about 30 megawatts of solar panels in 2010 and expects to produce close to 60 megawatts in 2011, Chen said. The company is in the process of doubling its existing, 65 megawatts of annual production capacity. When the new production equipment is up and running, the company believes it can cut manufacturing cost down to 90 cents per watt.

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